Demand Increase vs. Price Rise: Overall Capacity Utilisation Rate of Iron Ore Mines in China Continued to Improve in September, Expected to Have Further Room for Growth in October

According to SMM estimates, the capacity utilisation rate of domestic mines in September 2024 was 56.0%, up 0.8% MoM. The total production of concentrates in September was 20.203 million mt, down 390,000 mt MoM, with a daily average output of 673,000 mt, up about 10,000 mt MoM. Last month, the capacity utilisation rate of mines in north China, north-east China, and east China increased simultaneously.
Reasons for the increase:
1) Safety inspections were nearing completion, and the trend of mines resuming production was evident. In Hebei, especially in Chengde, the capacity utilisation rate of mines increased significantly this month. Most mine and beneficiation plants affected by safety inspections have resumed production, with only a few open-pit mines hindered by expired mining permits.
2) Weather was no longer an obstacle, leading to a comprehensive increase in production. In August, frequent summer rainstorms flooded some mines in Liaoning and Shandong. However, with improved weather in September, mines gradually resumed production, and capacity utilisation rates rose.
3) Pre-holiday stockpiling by steel mills boosted demand significantly. In late September, approaching the National Day holiday, rising steel mill profits spurred purchasing enthusiasm, accelerating shipments from mine and beneficiation plants and prompting some companies to increase production.
In some regions, such as south-west China, the capacity utilisation rate slightly decreased MoM, mainly due to stagnant local demand and significant price limitations, leading some mines to halt production for maintenance, continuing the slight decline in capacity utilisation.
As the peak season for end-use demand deepened, pig iron production continued to rise, driving overall demand for iron ore concentrates. Additionally, entering the last quarter of the year, some mines might engage in volume-boosting operations, with a slight increase in overall capacity utilisation expected in October.